United States v. Pursley ( 2022 )

Case: 20-20454 Document: 00516164175 Page: 1 Date Filed: 01/12/2022
United States Court of Appeals
for the Fifth Circuit United States Court of Appeals
Fifth Circuit
FILED
January 12, 2022
No. 20-20454
Lyle W. Cayce
Clerk
United States of America,
Plaintiff—Appellee,
versus
Jack Stephen Pursley,
Defendant—Appellant.
Appeal from the United States District Court
for the Southern District of Texas
USDC No. 4:18-CR-00575-1
Before Davis, Higginson, and Engelhardt, Circuit Judges.
Kurt D. Engelhardt, Circuit Judge:
This criminal case concerns an intricate tax-fraud scheme, involving
various offshore accounts, a myriad of transactions, and millions in untaxed
funds. The focus of this appeal concerns a complex question of fact and law,
involving various foreign governments, a host of ambiguous letters, and a
thicket of precedent. Jack Pursley raised this complex question as part of his
statute of limitations defense several times in motions to dismiss and in
proposed jury charges. The law and facts are difficult, but we conclude that
Pursley was deprived of his statute of limitations defense. Because Pursley
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timely raised this defense, he was entitled to have it considered and to have
the jury instructed on it.
I.
At some point in the past decade, a grand jury began investigating
Pursley for his part in a significant tax fraud scheme. The extensive details
of the conspiracy are laid out in the indictment and are mostly irrelevant to
the precise issue before us. Relevant here is that the scheme involved the use
of several offshore accounts, including certain accounts in the Isle of Man.
On February 18, 2016, the U.S. Government sent a first “Request for
Assistance in the Investigation of Jack Stephen Pursley and Charles Gillis”
to the Isle of Man (the “First Request”). According to a representation from
the U.S. Government, the First Request sought “business records from Isle
of Man Financial Trust Limited, bank records from the Royal Bank of
Scotland, Isle of Man branch, and official incorporation records for
Southeastern Shipping Company Limited and Pelhambridge Limited.” The
First Request also sought “the assistance of the Isle of Man to interview six
witnesses who are current or former employees of the [Isle of Man Financial
Trust Limited]: Andrew Thomas, Nigel Tebay, Andrew Mellor, Kerry
Smith, and Christine James and Tracy Duncan.”
On March 15, 2016, the U.S. Government sent the Isle of Man a “First
Supplemental Request for Assistance in the Investigation of Jack Stephen
Pursley and Charles Gillis” (the “Second Request”). According to the U.S.
Government, the Second Request sought “business records from Boston
Limited relating to the firm’s representation of Southeastern Shipping
Company Limited, Pelhambridge Limited, and Shaun Mooney and any of his
affiliates.” Neither Request was made part of the record, which reflects only
the U.S. Government’s representations on what was in the Requests.
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The Isle of Man cooperated with the Government and began sending
over the requested documentation as early as May 26, 2016. An August 21,
2017 letter states that the Isle of Man also sent over documentation on July
8, 2016, September 30, 2016, October 31, 2016, May 24, 2017, June 19, 2017,
and July 17, 2017. On May 18, 2017, the Isle of Man sent a response which
referenced the “Supplementary Letter of Request” (i.e., the Second
Request). At the end of the letter, it stated “I believe that this letter of
request is now executed in full but if I can be of any further assistance to you
in relation to this or any other matter please do not hesitate to contact me.”
Although the May 18 letter referenced the Second Request, it discussed
documents which were requested in the First Request.
The Government followed up with the Isle of Man with a series of
emails stretching from August 2017 through October 2018. These emails
demonstrate that the U.S. Government continued to seek certain documents
that were not provided as of May 18, 2017, and that it was frustrated in its
attempts to get these documents and (in particular) witness interviews.
On August 23, 2016, with both Requests pending, the Government
moved for a suspension of the statute of limitations under 18 U.S.C. § 3292,
which allows for a suspension of the limitations period when the Government
seeks evidence from a foreign country. District Court Judge Sim Lake
granted the ex parte application the next day. The district court’s order
stated that “the running of the statute of limitations for the offenses set forth
in the Government’s Ex Parte Application is hereby SUSPENDED for the
period authorized by 18 U.S.C. § 3292(b), (c).” The order did not specify
the length of the extension.
The grand jury returned a four-count indictment against Pursley on
September 20, 2018. Count One charged Pursley with conspiracy to defraud
the United States. Counts Two and Three charged Pursley with tax evasion
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for his 2009 and 2010 tax returns, respectively. Count Four charged Purlsey
with tax evasion in violation of 26 U.S.C. § 7201. The case was assigned to
United States District Judge Lynn Hughes.
Pursley moved to dismiss all counts as barred by the statute of
limitations. Relying on the suspension ordered by the district court, the
Government opposed the motion. The district court denied the motion to
dismiss without written reasons in a case management order. Pursley again
moved to dismiss the indictment as untimely based on new evidence in May
2019. The district court again denied the motion. At a pretrial hearing, the
district court seemed to base the dismissal on the order suspending the
limitations period without analysis of how long the suspension lasted. The
district court stated, “[A]pparently Judge Lake, in this building, extended
limitations, and I can rely on Judge Lake’s judgment. So I’m going to have
to deny the limitations defense.”
Pursley was tried in September 2019. Pursley proposed a jury
instruction that read: “For you to find the defendant guilty, the government
must prove beyond a reasonable doubt that the offense charged was
committed within 6 years of the indictment.” Defense counsel raised this
jury instruction at the charge conference. The Government objected to the
instruction for a variety of reasons, including because it failed to account for
tolling under 18 U.S.C. § 3292. The Government “acknowledged that it
could be appropriate to instruct the jury that it needed to find an overt or
affirmative act within the correctly defined limitations period” but “noted
that . . . the request was ‘awfully late’ and that ‘we could have dealt with this
earlier.’” The district court denied the limitations instruction requested by
Pursley, and the final jury instructions did not include any instruction
regarding the statute of limitations. The jury convicted Pursley on all counts.
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Pursley appeals both the denial of the motions to dismiss and the
denial of his requested jury instruction.
II.
We first address the district court’s denial of the motions to dismiss.
“This court reviews de novo the district court’s denial of a motion to dismiss
an indictment.” United States v. Kay, 513 F.3d 432, 440 (5th Cir. 2007).
Similarly, “[t]he district court’s ultimate decision that the statute of
limitations was properly tolled is a legal conclusion reviewed de novo.”
United States v. Wilson, 322 F.3d 353, 359 (5th Cir. 2003). But factual
findings underpinning that ultimate finding are reviewed for clear error. Id.To determine the merit of Pursley’s statute of limitations defense, it
is necessary to determine exactly when the statute of limitations commenced
and ran. Without a suspension, the statute of limitations for each count of
the indictment ran for six years. See 26 U.S.C. § 6531. As to Count One,
“this court has held that the overt acts alleged in the indictment and proved
at trial mark the duration of the conspiracy.” United States v. Loe, 248 F.3d
449, 457 (5th Cir. 2001). For Counts Two through Four, the statute of
limitations begins to run at the latest affirmative act to evade tax liability. See
United States v. Irby, 703 F.3d 280, 284 (5th Cir. 2012). The parties agree
that there was at least some suspension of the statute of limitations, but they
dispute how long that suspension lasted.
The length of any suspension is determined by 18 U.S.C. § 3292. That
statute provides that, upon application by the Government, a district court
shall suspend the running of the statute of limitations for an offense if the
court finds that an official request has been made to a foreign government for
evidence of the offense and it reasonably appears that such evidence was in
the foreign country. 18 U.S.C. § 3292(a)(1). The statute continues: “a
period of suspension under this section shall begin on the date on which the
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official request is made and end on the date on which the foreign court or
authority takes final action on the request.” Id. § 3292(b) (emphasis added).
Finally, the statute limits the length of time the limitations period may be
suspended. It states that “[t]he total of all periods of suspension . . . shall not
extend a period within which a criminal case must be initiated for more than
six months if all foreign authorities take final action before such period would
expire without regard to this section.” Id. § 3292(c)(2). The parties dispute
whether the Isle of Man Government took “final action” on May 18, 2017.
If so, the total length of the suspension was six months. Id. § 3292(c)(2). If
not, the suspension was through the date of the indictment. Id. § 3292(c)(1).
We have expounded on the meaning of “final action” in § 3292(b)
before in United States v. Meador, 138 F.3d 986 (5th Cir. 1998). In that case,
the U.S. Government investigated the sale of certain rare goods which were
stolen during World War II. Id. at 998. The U.S. Government made an
official request to Germany on March 2, 1995 for certain evidence, including
an interview with Dr. Klaus Maurice. Id. at 998–99. By June 7, 1995, all of
the witness interviews were completed. Id. at 989. On October 27, 1995, the
German Ministry of Justice sent a letter stating: “I have the honor of
transmitting to you the following items in satisfaction of the above request
which have turned up in Bavaria. . . . According to my documentation, the
request has now been satisfied. I therefore consider my function to be
concluded.” Id. Despite the German Government’s representation, it
followed up by sending additional relevant documents to the U.S.
Government, and the U.S. Government responded that additional
documents were required. Id. The prosecutors did not wait for a response
before indicting the defendants. Id. at 990. The German Government
eventually followed up with the requested documents almost four months
after the indictment was returned. Id. Shortly after their initial request to
the German Government, prosecutors sought, and were granted, a
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suspension of the statute of limitations under § 3292. Id. at 989. The
question before the court was at what point the German Government took
“final action” within the meaning of § 3292. Id. at 991.
We held that the German Ministry’s October 27, 1995 letter
constituted a “final action” notwithstanding the additional documents it sent
or the prosecutors’ follow-up requests. Meador, 138 F.3d at 991–92. In
coming to this conclusion, we held that a determination of when a “final
action” has been taken by a foreign government “must turn on whether a
dispositive response to an official request for evidence from our government
has been obtained.” Id. at 992. We explained that “when the foreign
government believes it has completed its engagement and communicates that
belief to our government, that foreign government has taken a ‘final action’
for the purposes of § 3292(b).” Id. We further emphasized that “[t]here
must be a certain and definitive end to the suspension period, a point at which
‘final action’ can be plainly located. If the period is suspended retroactively
whenever another relevant document comes in, there will be no certain end.”
Id. at 994. Finding that the October 27, 1995 letter from the German Ministry
constituted a “dispositive response” that the “government believe[d] it
[had] completed its engagement,” we ruled that letter constituted a final
action. Id.
The Meador court relied in part on United States v. Bischel, 61 F.3d
1429 (9th Cir. 1995). In that case, the Ninth Circuit was faced with the
meaning of “final action” within the statute. The court adopted the test
ostensibly approved by the Fifth Circuit, i.e., that a “final action” must
include “a dispositive response to each item set out in the official request,
including a request for certification.” Id. at 1433. It further held that
“pegging ‘final action’ to disposition, up or down, of each of the items in the
official request provides a more certain benchmark by which to measure
whether the action that has been taken is ‘final’ or not.” Id. at 1434. But
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there exists tension between the two opinions. As the Eleventh Circuit has
noted, “[a]lthough in form Meador is consistent with Bischel, we find the Fifth
Circuit’s opinion in Meador substantively more narrow as it requires only that
the foreign government think that is [sic] has provided a complete response,
whereas, in Bischel, the Ninth Circuit required a complete response to the
government’s original request.” United States v. Torres, 318 F.3d 1058, 1063
n.7 (11th Cir. 2003).
On appeal, Pursley asks us to hold that the Isle of Man’s May 18, 2017
letter demonstrated that “the foreign government believe[ed] it ha[d]
completed its engagement and communicate[d] that belief to our
government” and was therefore a final action within the meaning of
§ 3292(b). Meador, 138 F.3d at 992. The Government asks us to find that the
May 18 letter did not include “a dispositive response to each item set out in
the official request, including a request for certification” and therefore
cannot be a “final action” under Bischel or Meador. Bischel, 61 F.3d at 1433.
Thus, the parties seek this court’s determination of the import of the
Isle of Man’s May 18, 2017 letter, which is an inextricably fact-bound
question. For example, the fact-finder must weigh whether the Isle of Man’s
May 18, 2017 letter was referring to both of the U.S. Government’s Requests
and whether, in context, that letter was an indication that the Isle of Man
believed it had completed its engagement. Making such a factual finding is
in the clear province of the district court and is beyond our role as an appellate
court. See Norelus v. Denny’s Inc., 628 F.3d 1270, 1293 (11th Cir. 2010)
(“[A]s everyone knows, appellate courts may not make fact findings.”).
Indeed, at oral argument, both parties conceded that the district court should
determine the length of any suspension under § 3292 in the first instance.
The district court denied Pursley’s motions to dismiss summarily,
referring to Judge Lake’s order pursuant to § 3292. But no district judge has
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yet calculated the length of the suspension under § 3292. On remand, the
district court should consider the record 1 and the applicable law to determine
whether the Isle of Man’s May 18, 2017 letter was a “final action” on these
facts. It should then calculate the relevant suspension of the statute of
limitations. If the last overt act or affirmative act of any count falls outside of
the statute of limitations, as suspended, that count is subject to dismissal.
III.
We next turn to Pursley’s related claim that the district court erred in
failing to instruct the jury on his statute of limitations defense. The parties
dispute our standard of review here. Pursley argues that our review is de
novo; the Government presses that it should be for clear error. Because the
district court erred under either standard of review, we pretermit this
question. See United States v. Holguin-Hernandez, 955 F.3d 519, 520 n.1 (5th
Cir. 2020).
A proposed instruction must (1) be substantially correct as a statement
of the law, (2) not be substantially covered in the charge as a whole, and (3)
concern an important issue in the trial, such that failure to give it seriously
impairs the presentation of an effective defense. See HTC Corp. v.
Telefonaktiebolaget LM Ericsson, 12 F.4th 476, 484 (5th Cir. 2021); see also
United States v. Davis, 609 F.3d 663, 689 (5th Cir. 2010). Here, the parties
contest only the first element—whether the proposed instruction was
“substantially correct as a statement of the law.”
The proposed jury instruction in question stated: “For you to find the
1
We note that the record in this matter is sparse, in large part because the
Government failed to produce evidence that is within its possession. For example, the
record does not include the First or Second Requests themselves or the vast majority of the
responses from the Isle of Man. See United States v. Wilson, 322 F.3d 353, 359–60 (5th Cir.
2003).
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defendant guilty, the government must prove beyond a reasonable doubt that
the offense charged was committed within 6 years of the indictment.” The
Government argues that the district court was correct to reject the
instruction because, as initially proposed by Pursley, the instruction failed to
account for any suspension of the statute of limitations and was therefore not
“substantially correct.” But at the charge conference, Pursley’s counsel
offered to modify the instruction with a suspension and reasonably pointed
out that there had been no exact judicial determination of how long any
suspension was. Without such a determination, it was difficult to draft a jury
instruction taking into account that suspension. 2 The Government conceded
at the charge conference, in its brief, and at oral argument, that a proper
instruction could be formulated. But the Government’s position at the
charge conference was not that the instruction as proposed was improper,
but rather that because prosecutors felt the issue was “highly complex” and
“was opening a can of worms awfully, awfully late” 3 that it was “an
unnecessary request” that was “preserved for appeal.” These arguments
are unpersuasive. Pursley’s request for the jury instruction was timely, and
the complexity of the issues involved does not justify denying a defendant a
requested instruction.
We have held that a proposed jury instruction is “substantially
incorrect” when, for example, the instruction relied on inapplicable law or
had no foundation in the text of the relevant statute. See HTC Corp., 12 F.4th
2We acknowledge that at one point in the charge conference the district court
stated that the suspension was “two years and nine months.” This calculation was based
solely on the Government’s rough estimate at the charge conference, and no one argues
that it was correct on appeal.
3
The Government’s contention that this issue was brought “awfully late” is belied
by the record, which includes two motions to dismiss and two versions of Pursley’s
proposed jury instructions regarding the statute of limitations.
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at 484 (holding that a jury instruction based in United States patent law was
not substantially correct when French law, not United States law, applied);
United States v. Perez-Valdez, 182 F.3d 331, 332–33 (5th Cir. 1999) (holding a
district court did not abuse its discretion when it rejected a jury instruction
which “has no foundation in the text of the statute and is contrary to its plain
language”). But there was no such fundamental error here. On these facts,
we reject the Government’s contention that the district court properly
denied the proposed jury instruction because it was “substantially
incorrect.” It is difficult to fault Pursley’s counsel for not incorporating any
suspension period when the district court provided no guidance on how long
the statute of limitations was suspended. As described above, this is
necessarily a factual issue the district court must resolve. Moreover, even if
the jury instruction had incorporated the Government’s preferred length of
tolling, there were acts incorporated as to each count outside of this period.
Once a statute of limitations defense was raised, the Government was
required to prove that at least one overt act or affirmative act took place
within the limitations period as to each count. See United States v. Mann, 161
F.3d 840, 865–66 (5th Cir. 1998); see also United States v. Williams, 928 F.2d
145, 149 (5th Cir. 1991). The jury never made any such finding in this case,
on the jury form or elsewhere, as it was never instructed that it was required
to do so. On remand, the district court is hereby directed to calculate the
length of the suspension, as detailed above. Pursley is entitled to a new trial,
in which a jury must find that an overt or affirmative act was committed in
the proper limitations period as to each count.
IV.
Pursley was entitled to have the district court fully consider his statute
of limitations defense, to have the district court calculate the exact time the
statute of limitations ran under existing precedent, to dismissal of any charge
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that was untimely under that calculation, and to a jury instruction on the
statute of limitations defense. Accordingly, we VACATE Pursley’s
conviction, and REMAND for proceedings consistent with this opinion.
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